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Dutch quake leaves UK gas market on shaky foundations

An earthquake triggered by a giant Dutch gas field has sent tremors through the UK’s gas market - PA

An earthquake triggered by a ­giant Dutch gas field has rocked the UK’s gas market in a further threat to energy supplies that risks driving gas bills higher.

The third-strongest quake in Dutch history registered 3.4 on the Richter scale last week and has unearthed fresh calls to wind down gas production in the Netherlands, which is Britain’s third largest source of gas imports.

The giant Groningen gas field has helped make the Netherlands the most important gas market in Europe, but decades of drilling has riddled the northern Dutch town with earthquakes for years.

The Dutch gas regulator has made an official appeal to ministers to make “substantial” gas production cuts in their response to the Groningen quake due next week.

Dutch tremors rip through gas markets

“This could affect gas supply to households and businesses, but we will not take that into account. It is up to the minister to balance safety and certainty of supply,” the regulator said.

The fresh gas supply fears emerged just weeks after UK gas prices surged to six-year highs after a “perfect storm” of supply problems hit the market in its first winter without the security of Britain’s main gas storage facility. Dutch ministers are only likely to shut six small clusters of gas wells before the end of this winter but an acceleration of its plan to wind down gas production is likely for the years ahead.

One UK energy trader told The Sunday Telegraph that a quicker than expected decline in Dutch gas production “adds weight to the security of supply questions raised as we increasingly rely on imports”.

Gas imports

The UK has shut its ageing Rough gas storage facility, even as North Sea gas production ­declines, in favour of importing gas from Europe, Norway and on the global market via super-chilled tankers of liquefied natural gas (LNG).

A major North Sea pipeline outage last month coincided with problems at Norway’s offshore gas terminals, ­resulting in historic market price highs and laying bare the extent of the UK’s reliance on imports. One UK gas buyer turned to Russia for a cargo of arctic LNG. The UK typically sources LNG from the Middle East but buying one-off cargoes is also likely to become more expensive. China imported ­record volumes of LNG last year in a bid to wean its polluted cities off burning coal, lifting Asian gas prices to six-year highs. The UK will need to compete on price to lure cargoes away from lucrative Asian gas buyers.

Ben Samuel, of energy data firm ICIS, said the market price reaction so far had been “muted” while traders wait to see how deep the production cuts will go. But the long-term price for UK gas has none the less climbed 10pc higher than where it was last month ahead of the ministry’s decision.

“The Netherlands is the benchmark gas market in Europe, and the price-setter, so anything that happens in the Netherlands will inevitably affect the rest of Europe and Britain as well,” Mr Samuel warned.